Insuring Your Most Valuable Asset: Your Career

Auto insurance? Check. Health insurance? Check. Home insurance? Check. Life Insurance? Check. Disability insurance? Er...not so fast. If you're like most Americans -- about two thirds -- you're about tapped out just covering your material possessions, paying student bills or saving for your kids' future, maybe even putting a little away for retirement. You see disability insurance as a low-priority luxury.

According to a new survey from the nonprofit LIFE Foundation, only one in six working Americans (16 percent) consider their paycheck to be their most valuable asset. What many fail to consider is what would happen to them and their families should they suddenly become sick or injured, and unable to work.

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The reality is that the financial consequences of suffering a disability can be far-reaching. A 25-year-old worker who makes $50,000 a year could lose $3.8 million in future earnings if they became permanently disabled and were unable earn an income. Yet, fewer than one -in-three workers in the private sector have long-term disability coverage through work, according to the U.S. Department of Labor.

"Most people don't realize that they have a three-in-10 chance of suffering a disabling illness or injury that could keep them out of work for three months or more," said Marvin H. Feldman, president and CEO of the LIFE Foundation. "Disability insurance makes sure that financial hardship doesn't follow the physical and emotional toll that comes along with disability. It's insurance for your income. When you think about it, your most valuable asset isn't your home, car or jewelry. It's what allows you to pay for all these things -- it is your paycheck."

A good rule of thumb is that if you work for a living, you need disability insurance. Here's how to figure out what kind of coverage is necessary for you:

Understand your options for obtaining disability insurance.

For many, disability insurance options may be available through your employer. Many employers provide short- and/or long-term group disability insurance coverage either at no cost to the employee or on a voluntary basis in which the employee pays for the cost of the coverage. In addition, many professional associations offer their members the opportunity to purchase disability insurance through a group plan. You also have the option of purchasing an individual disability insurance policy through a qualified insurance professional.

Understand the role your age and health status play.

If you are older or have health problems, employer-provided group disability insurance can be easier to qualify for and more affordable than individual policies, which typically have stricter underwriting rules.

Factor in your career path and goals.

Employer or association-provided group coverage can be a valuable benefit, but the policy won't transfer with you if you take a job with a different company, decide to retire, or change professions. Individual coverage goes where you go.

Calculate the real costs of disability.

Disability insurance can replace a substantial portion of your income when you become ill or injured, and can't work. To determine how much disability insurance you may need, you can use a tool like this Disability Insurance Needs Calculator.

Read the fine print – know what your plan covers.

It pays to know the specifics of your coverage plan. Be sure to ask about what triggers the policy (is it the inability to do your specific job or to do any job at all, for example), your policy's waiting period for receiving benefits, whether there is a monthly payout cap, and how long benefits will last.

When you take all that into consideration, and add in the fix your dependents would be in if you're disabled, you might think twice about disability insurance. If you know your employer provides it, you might want to check the coverage to see what it involves, and make sure you're signed up. Also, when considering a new job, find out whether the company offers disability insurance. If it's a risky, high-stress position, this can by an invaluable benefit worth negotiating.